Scroll (@Scroll_ZKP): Introducing Cloak: Practical Privacy for Onchain Finance

Introducing Cloak: Practical Privacy for Onchain Finance Why We Built Cloak In the past year, stablecoin settlement on @Ethereum surpassed $900 billion. This growth isn’t limited to crypto natives. Banks, fintechs, and payment processors are also exploring onchain rails for global money movement. But here is the catch: blockchain transparency, while powerful, exposes user activity beyond what traditional finance would accept. A $USDC transaction today reveals more commercial data to the public than a debit card swipe. Without compliant privacy features, enterprises hesitate to move onchain. That’s where Cloak comes in. What Is Cloak? Cloak is a zk-powered private ledger secured by zero-knowledge proofs, designed to bring practical privacy to onchain finance. It is programmable, cost-efficient, and enterprise-friendly, targeting the “privacy–compliance–usability” trilemma that enterprises face in their blockchain transformation. Unlike fully self-custodial systems like Aztec, Cloak takes a different approach, adopting a practical privacy route, designed for fintech solutions such as payments, banking, and global money movement. On a Cloak execution layer, every transaction is processed inside a private ledger. Transaction details and account balance remain hidden, while the integrity of the ledger is guaranteed publicly through ZK proofs. Key features: Sovereign Control: Businesses retain full control over data, bridge contracts, and assets. No vendor lock-in. Programmable Privacy: Full EVM support allows developers to deploy custom smart contracts with private state and execution. Compliance Suite: KYB/KYC hook support, real-time monitoring, and selective-disclosure APIs satisfy regulatory needs without exposing full data to the public. Seamless Onchain Access: Connect directly to Scroll L2 for bridging, on/off-ramps, and DEX access. User benefits: Private Vaults: Balances, deposits, and transaction history are visible only to the parties involved - not to the public. Fast, Inexpensive Transactions: Sub-2 second settlement and near-zero gas fees. One-Click Access: Designed for everyday user with mobile and social login via smart wallet SDK. Real-World Use Cases The journey to build robust onchain financial infrastructure has just started. We are working with design partners to co-create practical private solutions for real world use cases in onchain finance. Shiga – Private Cross-Border Payments @ShigaDigital gives African merchants the power to embed crypto directly into their financial operations. With Cloak built in, businesses tap into blockchain’s speed, transparency, and efficiency - without compromising sensitive data. From payments to payroll, every transaction stays private yet verifiable through ZK view keys. The result: secure, seamless finance with full sovereignty in the hands of businesses. Ether.fi Cash Card – Private Spend Management @ether_fi cash card is a non-custodial, DeFi-native credit card that keeps spend history off-chain. Cloak ensures revolving credit, balances, and purchases are private, while publishing ZK proofs for solvency. Deep Dive into Cloak’s Tech Design Cloak is built on the zk-validium architecture. Unlike public zk-rollups that post all transaction data to the settlement layer, zk-validium posts only the zk proofs and state roots. Each proof attests that a batch of valid transactions was executed correctly and the global state root updates from S_old to S_new without revealing the underlying transactions. To make it simpler, Cloak only shows the before and after change is done correctly without revealing additional information. This ensures transaction correctness is guaranteed by cryptographic proofs, so enterprises and users can confidently rely on the results without having to trust the sequencer itself. On top of this foundation, Cloak integrates tightly with Scroll for near-instant asset deposits and withdrawals between layers, enabling access to Scroll’s DeFi stack. This is how we balance practicality in financial use cases with privacy. Each Cloak instance is powered by a set of core components: a sequencer, a private RPC gateway, an indexer, bridge contracts on Scroll, and a cluster of dedicated zk provers. Here’s what happens after a user signs a transaction in their enterprise app or wallet: The transaction goes to Cloak’s private RPC gateway, the single entry point that authenticates requests and enforces fine-grained access control. The app-specific sequencer processes approved transactions and updates the private chain state stored in a secure ledger - deployed either in the cloud or on-premises. ZK provers generate a zk proof for every batch of transactions. The proof and updated state root are verified by bridge contracts on Scroll, which are then settled on Ethereum - anchoring Cloak’s integrity and security to L1. In addition, the Cloak SDK comes with a full suite of developer tools, including: Indexer & Permissioned Block Explorer: indexes all transaction data and provides a private explorer that hides sensitive details from unauthorized viewers. Optional Data Availability Committee (DAC): attests to data integrity, enabling secure collaboration between multiple enterprises. Wallet SDK: allows enterprises to build fully customized wallets tailored to their branding, workflows, and compliance needs. Bringing Onchain Finance Mainstream Global payments onchain needs practical privacy to achieve the ideal user experience and 100% compliance at the same time. Cloak’s mission is to deliver a bank-grade privacy while staying programmable and onchain. If you're building a wallet, payment platform, or fintech service and want a private backend you can control, audit, and scale - Cloak is for you. Register your interest here for a live demo FAQs 1. Is Cloak centralized or permissioned? Cloak currently uses a permissioned sequencer model to ensure performance and privacy. The roadmap includes decentralizing parts of the stack while preserving access controls needed for enterprise use. 2. Who controls data or can censor transactions? Enterprise clients that deploy Cloak retain full sovereignty over their deployment. They control their instance’s bridge contracts, sequencer (if self-hosted), and admin rights. Only authorized parties can view full/partial transaction details based on the setting by the client. 3. What are the best use cases for Cloak? Wallets, payment processors, neobanks, and fintech platforms looking to provide traditional banking-like privacy on public blockchain infrastructure. 4. How is Cloak different from Aztec, Tornado Cash, and Railgun? Tornado Cash and Railgun offer privacy but are costly and carry compliance risks. Aztec offers strong privacy but lacks EVM compatibility, requiring higher development costs and contract rewrites. Cloak maintains full EVM compatibility with built-in enterprise controls and selective disclosure. 5. What compliance and AML support is offered? We are working with KYT (Know Your Transaction) providers to ensure transactions are meeting EU standards. 6. Why trust Scroll as Cloak’s settlement layer? Scroll is a Layer 2 zk-rollup on Ethereum, so every Cloak transaction ultimately benefits from Ethereum’s security - your assets sit in Ethereum contracts, and all activity is verified there. With Scroll’s Stage-1 security level, if the sequencer operated by Scroll ever goes down, Cloak can force your funds to be withdrawn directly to Ethereum. 7. Is Cloak the same as a mini zk-rollup on Scroll? How does a zk proof guarantee the integrity of the private ledger? Unlike zk-rollups, which publish both transaction data and proofs, zk-validium posts only the zk proofs and state commitments to the settlement layer. zk-validium posts only proofs and state commitments. If a sequencer tries to process an invalid transaction, such as one without a valid signature, or allowing a double spend, generating a valid proof is mathematically impossible. This ensures privacy while guaranteeing correctness.